**US Dollar Price Action Setups Into 2026: EUR/USD, GBP/USD, USD/JPY**
*By James Stanley, originally published at Forex.com*
The US dollar remains the central axis of the forex market, and as the broader global economy recalibrates in response to shifting central bank policies, persistent inflation, geopolitical risks, and evolving macroeconomic growth, its price action setups remain critical for traders and analysts. This article recaps and expands upon the insights by James Stanley on Forex.com regarding US dollar price action in the major pairs EUR/USD, GBP/USD, and USD/JPY, analyzing post-pandemic trends, recent technical movements, key drivers, and future scenarios as we approach 2026.
## The US Dollar: Broad Overview
### Pandemic-era Dynamics
From the shockwaves of COVID-19, central banks globally slashed rates and bolstered liquidity. In the US, the Federal Reserve cut rates to near-zero and implemented aggressive quantitative easing (QE), ballooning the balance sheet significantly. The dollar initially weakened on this surge in liquidity, only to rebound as US growth outperformed and the Federal Reserve signaled tightening earlier than peers.
**Key factors fueling dollar swings since 2020:**
– Massive monetary accommodation, including QE
– Shifts in risk sentiment and flights to safety
– US economic outperformance relative to G10 peers
– The Fed’s lead in tightening cycle
Since March 2022, a fresh rate hiking cycle has taken center stage. The Fed’s hawkish stance provided tailwinds for the greenback, and as global uncertainties lingered—such as the Russia-Ukraine war, energy price spikes, and growth fears—the US dollar retained a premium as the reserve currency.
### Turning Points and Technical Landmarks
The US Dollar Index (DXY) provides a composite look at dollar strength, heavily weighted towards the euro, Japanese yen, and British pound. Since early 2022:
– DXY started a sharp rally from beneath 90, topping around 114.78 in September 2022, a level not seen since 2002
– After peaking, the dollar experienced a period of retracement as inflation began to recede and the Fed neared the peak of its policy rate cycle.
– Going into 2024, renewed rate cut speculation and improving risk appetite introduced more two-way action.
With the global economic narrative shifting toward normalization but also facing persistent inflation and uneven growth, the US dollar’s next phase is deeply entwined with monetary policy expectations and geopolitical risks.
## EUR/USD: The Euro’s Battle for Stability
### Long-term Context
EUR/USD is the world’s most actively-traded currency pair, serving as the main reference for dollar performance. During the COVID-19 recession, EUR/USD climbed as the US loosed monetary conditions aggressively, reaching its peak around 1.2350 in early 2021.
However, as the Fed pivoted to a tighter policy and the European Central Bank (ECB) lagged in raising rates, the pair declined, falling as low as 0.9535 by September 2022—a level not seen since 2002.
### Recent Price Action and Technical Analysis
After bottoming, the euro managed to recover above parity, finding a resistance pivot around 1.10 before consolidating in a volatile channel.
**Technical takeaways for EUR/USD:**
– **Support:** 1.0500 to 1.0600 (September-October 2023 lows)
– **Resistance:** 1.1000 to 1.1100 (multiple 2023 highs)
– **Long-term range:** 0.9500 on the downside, 1.1500-1.1600 on the upside
**Indicators to watch:**
– 200-day Simple Moving Average (SMA): Currently acting as dynamic resistance/support
– RSI: Ranging near neutral, showing no extended overbought/oversold settings at present
Read more on GBP/USD trading.